In my Pre-Week Market Analysis, I pointed out a great bullish setup on Cable. Well, it’s starting to materialize now, so I think it’s time to reveal a more detailed plan.
Isn’t that a beauty? The pair, after finding support at the 1.5100 psychological handle, has been climbing since. Cable is now pulling back slowly, which is giving me a good opportunity to jump in on a long.
Once price tests 1.5400, I’m going to wait patiently for bullish candlesticks to appear before pulling the trigger. What’s great about 1.5400 is that it is not only a major level, but it coincides with both the 200-SMA and the rising trend line.
I’m aiming for new highs but I’ll play it safe and take some profit off the table on the previous highs. As for my stop, I’ll place it below the 61.8% Fibonacci retracement level and the rising trend line at 1.5320.
The outcome of my trade will largely be dependent on the BOE MPC meeting minutes. Due in a few minutes, we’ll finally get the lowdown on the central bank’s monetary policy decision last week.
If you remember, BOE Governor Mark Carney announced that the MPC would only consider tightening if the unemployment rate reaches 7.0%. Currently, the rate of joblessness is at 7.8%.Now, should the minutes reveal that all the members voted to peg future monetary policy decisions to the unemployment target, which would take 2 to 3 years to reach, we could see the pound trade lower.
On the other hand, I’m hoping to see that some MPC members didn’t find the peg necessary. If this turns out to be the case, the currency could resume its rally as it would mean that the committee isn’t all that dovish.
I’ll be closely watching the report before pulling the trigger. Follow me on Facebook and Twitter so I can update you!
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